Generally, the end date of a company's financial reporting is December 31 and the preparation of the annual financial statements is usually completed after some time. In the period from the end of reporting date to the completion of preparation, events may occur that affect the financial statements or the going concern of the company. In this article, the Tax Team from KAP Agus Ubaidillah dan Rekan (TGS AU Partners) will discuss the completeness of PSAK 8.

This PSAK 8 regulates when an entity must present its financial statements for events after the reporting period and disclosures made by the entity about the date the financial statements were authorized to be issued and events after the reporting period.

Events after the reporting period are events that occur between the end of the reporting period and the date the financial statements are authorized to be issued, whether favorable or not. These events can be divided into two types, namely:

  • Events that provide evidence of conditions exist at the end of the reporting period
  • Events that indicate the occurrence of conditions after the reporting period

The date on which the financial statements are authorized for the issue is the earlier of the date management has asserted that the financial statements have been completed and the date that management has assumed responsibility for the financial statements.

An entity shall adjust the amounts recognized in the financial statements to reflect adjusting events after the reporting period such as the following examples of events:

  • Settlement of a court case after the reporting period that determines that the entity has a present obligation at the end of the reporting period. The entity adjusts the provisions related to the court case in accordance with PSAK 57: Provisions, Contingent Liabilities, and Contingent Assets, or recognizes new provisions.
  • Receipt of information after the reporting period that indicates an asset impairment at the end of the reporting period, or the need for an adjustment to an amount previously recognized as an asset impairment loss.
  • Determination after the reporting period of the cost of assets purchased, or proceeds from the sale of assets sold before the end of the reporting period.
  • Determination of the amount of profit-sharing or bonus payments after the reporting period, if the entity has a present legal or constructive obligation at the end of the reporting period to make payments as a result of events after that date.
  • Discovery of fraud or errors that indicate that the financial statements are incorrect.

An example of an event that does not require adjustment after the reporting period is a decrease in the fair value of investment between the end of the reporting period and the date when the financial statements are authorized for issue and do not need to be disclosed.

Events that do not require adjustment but need to be disclosed include:

  • Significant business combination after the reporting period
  • Announcement to stop an operation
  • Significant asset purchases
  • Significant damage to production plant due to fire after reporting period
  • Announcement of commencement of significant restructuring
  • Significant potential common stock transactions after the reporting period
  • Abnormally large changes after the reporting period in asset prices or foreign exchange rates
  • Changes in tax rates or tax regulations that are enacted or announced after the reporting period
  • Giving commitments or incurring significant contingent liabilities
  • Commencement of significant lawsuits arising solely from events occurring after the reporting period

For the distribution of dividends made after the reporting period, the entity does not recognize the dividend as a liability at the end of the reporting period.

An entity does not prepare financial statements on a going concern basis if after the reporting period, there is evidence that the entity will be liquidated or discontinued, or if management has no realistic alternative but to do so.

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